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When confronted with two diverging roads, the narrator in Robert Frost's poem "took the road less travelled by, and that has made all the difference".

Unfortunately, those travelling Auckland roads at peak times rarely have that choice.

Along with other international cities, Auckland confronts the challenge to better manage congestion. Cities that successfully do so over the next decade will reap significant rewards through improved lifestyles for their residents and enhanced competitiveness. New technology makes it easier to achieve these outcomes — and so can good economics.

So far, Auckland has responded to congestion by extending worthwhile road infrastructure and levying a 10c regional fuel tax to fund public transport, including light rail. But basic economics tells us that such solutions will be short-lived for so long as cars gain free access to roads at peak times. Each vehicle that enters the road network reduces the space available for others, reducing traffic to a crawl. While access to roads remains free at peak times, the congestion problem will continue to feed on attempts to fix it.

Global view

Singapore, London, and cities in the US and elsewhere are tackling gridlock by introducing or upgrading infrastructure for levying congestion charges. Car owners who place the lowest value on accessing roads at peak times will choose not to pay the charge, thereby freeing up space for others. The result will be less congestion.

The mirror image of a congestion charge is rewarding commuters who switch from cars to public transport. Incentive payments are often used to help influence choices. Subsidies paid by Auckland ratepayers and central government to fund public transport attempt to achieve this goal.

If both a congestion charge and an incentive payment can influence choices, why not use both? Money raised from road users who wish to occupy space on the roads at peak times would be recycled to encourage others to switch to other transport modes that use less space at those times (notably public transport), or elect to travel at off-peak times.

Net revenues collected from congestion charges would be recycled to operators of public transport (buses, trains or mini-buses) according to the number of passengers carried at peak times, and to vehicles that access the road network at certain off-peak times during the day. Revenues would also be applied to fund the additional costs of those who travel at peak times and face a diminished ability to use public transport.

Shift tax burden

In contrast to congestion charges, fuel taxes and RUC levies are primarily linked to distance travelled, not vehicle speed. Distance-related charges will remain a useful source of indirect funding of new roads that exceed cost-benefit hurdles.

Beyond the next 2-3 years, however, new distance-related funding mechanisms will be needed as electric vehicles become more common.

A package along these lines will hopefully increase the acceptability of a congestion charge. For example, it would be harder for naysayers to assert that congestion charges are a misdirected tax grab by local and central government. After allowing for administration costs, all revenue collected from tolls would be paid to public-transport operators on a per-peak passenger basis and to motorists who travel in specified off-peak windows.

The additional revenue for public-transport operators would support long-term investment in new capacity.

Compared to current arrangements, such an outcome would reduce the relative burden of subsidies funded from local body rates and central government taxes.

New technology

New technology makes congestion charging more feasible now than was the case a few years ago. Singapore is at the forefront of congestion charging.

From 2020 it is replacing outdated gantry technology with a new generation of sophisticated smartphone-sized units in vehicles. The first dashboard units will be provided free of charge. Auckland could do the same.

The smart-device would automatically calculate charges (or rebates, if offered to drivers who elect to use roads at specified off-peak times) in a verifiable and tamper-proof way, while protecting privacy.

Out-of-town vehicles could either rent a device or pre-pay a one-off, city-wide daily charge. Technology similar to that which exists already should enable vehicles without smart devices to be photographed. The vehicle owner would be notified and given a reasonable time to pay the charge, with an appropriate surcharge.

There is little point in confining congestion charges to main arterial routes, such as motorways. Based on the experience of Australia, this would merely transfer congestion to suburban streets. Accordingly, charges would apply to vehicles travelling at peak times on all roads that are subject to significant congestion.

Levies would be graduated according to congestion levels in any defined part of the road network and the time of day. Charges would therefore be highest at times of greatest road use and would vary across the road network, depending on traffic flows. No levies (or rebates) would apply during periods of the day when traffic flows freely (for example, from late evening to early morning and weekends).

Charges will be the most useful when they provide real-time feedback so that commuters can decide their mode of transport while they eat their morning muesli.

But at least initially it may be practical to operate a weekly or monthly schedule of charges and rebates that would be announced in advance.

Adjusting charges and rebates over time will also be necessary to match the revenue from charges with payments to public transport providers, and off-peak car users.

Congestion pricing

A key issue is establishing the level of road-access pricing (or rebates) for optimal traffic flows. Prices could be set according to a performance benchmark.

For example, a benchmark might be that vehicles are able to travel at peak times at no less than (say) 80 per cent of the speed limit for 80 per cent of journeys. This translates to 40 km/hour in suburban streets and 80 km/hour on arterial routes subject to a 100km/hour speed limit. Setting prices to achieve these targets would utilise historical and real-time data on the responsiveness of traffic flows to congestion charges.

To promote fairness, the introduction of congestion pricing would coincide with reduced fares and substantially better availability of public transport during peak periods. An example would be an expansion of the fleet of smaller mini-buses and carpooling.

Operators of feeder minibuses would be financially rewarded for each passenger carried, thereby reducing fares paid by passengers. Minibuses would use ride-sharing apps to operate flexible 'on call' routes to pick up commuters near where they live and transport them to bus or train hubs. Payment could be made through AT Hop Cards. Some operators may choose to operate only during periods of peak demand.

By these means, those who travel at peak times would have access to a more efficient and responsive public transport network than is the case now. It will take time to implement the regime through a gradual roll out, perhaps by sub-regions in the city. But this should take a few years — not a decade.

Productivity

Reduced congestion would be a shot in the arm to increase productivity. Freight would travel more quickly and commuters would have more time for productive and leisure activities. The proposed approach to congestion charging would draw on currently available technologies, but would nonetheless be ground-breaking.

Auckland is big enough to have congestion problems like cities elsewhere, but is small enough to fix them and lead global innovation. Auckland's unitary government also helps.

Now is the time to consider a politically feasible congestion charging regime before the erosion of recent improvements to road capacity (including the Waterview tunnel) returns congestion to its previous levels.

• Alex Duncan is a principal of Finology, a small Seattle-based firm that often addresses how markets can be developed and improved.